Creator of "Black Swan": World Coronavirus Response A Case Examine of Authorities Incompetence and Denial
The world government's response to the coronavirus pandemic has been full of flaws that have prolonged the acute phase of the health crisis, "Black Swan" author Nassim Taleb told CNBC on Monday.
"I think this is a case study of the global government's incompetence in dealing with a problem and denial," said Taleb, whose 2007 bestseller warned of highly unlikely events and their potential for serious consequences.
In a "Squawk Box" interview, Taleb specifically pointed out the importance of coronavirus tests. While countries have improved their capacity since the beginning of the Covid-19 outbreak, Taleb says it has failed to develop fast and efficient tests to the extent that it can cut transmission chains early. It also has the lowest economic cost, he said.
"Ten months into the pandemic, we still don't have any systematic tests if you want to get on a plane or go to a restaurant or something," said Taleb, a former professor of risk engineering at New York University. "If we had systematic tests right away, we wouldn't be here. We wouldn't be talking about the pandemic now."
Taleb's comments come from the fact that coronavirus cases are on the rise again in the US and Europe, leading governments in the UK, Germany and France to different degrees to introduce lockdowns to reduce the spread. In America, Dr. Anthony Fauci, the nation's leading infectious disease expert, recently said the country could "impossible be positioned worse" as daily case numbers hit a number of record highs.
"We don't know what's going to happen. Imagine this lasts until January, February and March because people are indoors in winter and the infection rates are higher," Taleb said. "Think about what can happen. It's not that rosy."
Taleb said he believed everyday citizens and government leaders largely failed to understand the potential consequences of the pandemic. "I see a lot of rejection of this virus all over social life from the start," he said. "Now we have been in this virus for 10 months and people are still hoping for a vaccine that will reverse it."
While vaccine and therapeutic development is important, Taleb said people shouldn't operate like they're widespread just around the corner. "This kind of denial makes us add so many costs in GDP, in many things even in social life."
Taleb is a former derivatives trader and academic advisor at Universa Investments, a hedge fund that posted a return of over 4,000% in the first quarter. Universa uses a complicated risk mitigation strategy known as tail risk hedging that positions the fund to benefit from dramatic market corrections triggered by black swan events. According to an EY audit, Universa achieved an average annual return of 105% between 2008 and 2019, as confirmed by CNBC. Business Insider initially reported on the fund's performance.
"You should realize that you now have more uncertainty ahead of you than you think. The returns can be a lot better or a lot worse than you think," Taleb said, although he refused to comment directly on the returns. "There is a tendency for people to underestimate that insecurity is chronic."
Correction: Nassim Taleb is a former professor of risk engineering at New York University. In a previous version, its status was incorrectly stated.